Spancrete Corporation acquires a 30% interest in the outstanding stock of Werl Corporation on January 1, 2015. At that time, the following determination and distribution of excess schedule is prepared: Price paid $125,000 Less interest acquired: Common stock $150,000 Retained earnings 160,000 Total stockholders’ equity. $310,000 Interest acquired x 30% 93,000 Excess of cost over book value attributable to equipment (10-year life) $ 32,000 During 2015, Spancrete purchases $200,000 of goods fromWerl. $20,000 of these purchases are in the December 31, 2015, ending inventory. During 2016, Spancrete purchases $250,000 of goods from Werl. $30,000 of these purchases are in the December 31, 2016, ending inventory. Werl’s gross profit rate is 30%. Also, Spancrete purchases a machine from Werl for $15,000 on January 1, 2016. The machine has a book value of $10,000 and a 5-year remaining life. Werl reports net income of $90,000 and pays $20,000 on dividends during 2016. Prepare an income distribution schedule for Werl, and record the entries to adjust the investment inWerl for 2016 using the equity method.
Spancrete Corporation acquires a 30% interest in the outstanding stock of Werl Corporation on January 1, 2015. At that time, the following determination and distribution of excess schedule is prepared:
|
Price paid |
$125,000 |
|
|
Less interest acquired: Common stock |
$150,000 |
|
|
|
160,000 |
|
|
Total |
$310,000 |
|
|
Interest acquired |
x 30% |
93,000 |
|
Excess of cost over book value attributable to equipment (10-year life) |
|
$ 32,000 |
During 2015, Spancrete purchases $200,000 of goods fromWerl. $20,000 of these purchases are in the December 31, 2015, ending inventory. During 2016, Spancrete purchases $250,000 of goods from Werl. $30,000 of these purchases are in the December 31, 2016, ending inventory. Werl’s gross profit rate is 30%. Also, Spancrete purchases a machine from Werl for $15,000 on January 1, 2016. The machine has a book value of $10,000 and a 5-year remaining life. Werl reports net income of $90,000 and pays $20,000 on dividends during 2016. Prepare an income distribution schedule for Werl, and record the entries to adjust the investment inWerl for 2016 using the equity method.
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